We are wrapping up our discussion of ridesharing services and liability. In July, the California Public Utilities Commission issued a revision to its recently adopted ridesharing regulations regarding insurance coverage for transportation network companies. The PUC had learned the hard way that the original language was not enough.
TNCs had been required to carry commercial liability insurance to cover their drivers while they were “providing services” to the company. A driver was involved in a fatal accident last year, and the insurer refused coverage. The reason: The driver was not on his way to pick up a customer and did not have a customer in his car at the time of the crash, and, therefore, he was not providing services to the TNC.
The PUC identified three periods during which the driver is providing services to the TNC. During the first, the driver is logged in to the TNC app and waiting for a customer. The second is travel time, the time after the app matches customer and driver but before the customer gets into the car. The third covers the time the customer is in the car, up to his or her exit from the vehicle.
Each of these periods carries a different level of insurance risk, and the regulators factored that into their calculations. They set policy limits accordingly, requiring more coverage (a minimum of $1 million) for the second and third periods. The TNC’s coverage will be primary — that is, it will be first insurer the parties will turn to for payment if there is an accident.
The first period, that time when the driver is waiting for a customer, requires minimums of $100,000 for one person, $300,000 for more than one person, and $50,000 for damage to property. This coverage, however, is “excess” commercial liability coverage and, so, last in line. For example, if the driver’s personal auto policy cannot cover the entire claim, the excess policy will. Say the driver’s insurance has a $100,000 limit, but damages amount to $110,000. The TNC’s insurance will pay the additional $10,000 but no more than the limits listed above.
The insurance is not the sole responsibility of the TNC, either. The premium may be divided between the driver and the company as long as the policy meets regulatory requirements.
Only time will tell if the new formula works for the victims of accidents involving TNC drivers.
Forbes, “Lyft’s First Fatality: Passenger Dies In Crash Near Sacramento,” Ellen Huet, Nov. 2, 2014
California Public Utilities Commission, “Order Instituting Rulemaking on Regulations Relating to Passenger Carriers, Ridesharing, and New Online-Enabled Transportation Services,” June/July 2014 (revised)